Greeks vote for more economic pain

By John Defterios, CNN

Updated 1537 GMT (2337 HKT) November 12, 2012

Photos: Greeks protest austerity 15 photos

Protests in Greece – Municipal workers clashes with riot police during a demonstration against the presence of a German deputy labour minister Hans-Joachim Fuchtel, in Thessaloniki on November 15, 2012.

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Photos: Greeks protest austerity 15 photos

Protests in Greece – Riot police guard the Parliament building during a demonstration against austerity measures as Greek deputies consider a budget vote on November 11, 2012.

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Photos: Greeks protest austerity 15 photos

Protests in Greece – A portrait of German Chancellor Angela Merkel is roped and hung outside the Greek Parliament during a protest against austerity measures in Athens on November 11, 2012.

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Photos: Greeks protest austerity 15 photos

Protests in Greece escalate – Protesters demonstrate outside the Greek parliament against the new austerity measures in Athens on November 11, 2012.

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Photos: Greeks protest austerity 15 photos

Greece votes on austerity – Greek Prime minister Antonis Samaras (R) votes yes for approval of the 2013 budget at the Greek parliament in Athens on November 12, 2012 .

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Photos: Greeks protest austerity 15 photos

Strike turns violent in Greece – A protester kicks away a tear gas canister during a demonstration in Athens on November 7, 2012.

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Photos: Greeks protest austerity 15 photos

Strike turns violent in Greece – A man runs away from clashes between protesters and riot police outside the parliament in Athens on November 7, 2012.

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Photos: Greeks protest austerity 15 photos

Strike turns violent in Greece – Petrol bombs exploded during a demonstration in Athens on November 7, 2012.

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Photos: Greeks protest austerity 15 photos

Strike brings Greece to a standstill – A dog sleeps in a deserted commercial street in central Athens on November 7, 2012 during a 48-hour general strike.

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Photos: Greeks protest austerity 15 photos

Strike brings Greece to a standstill – Demonstrators stand in front of the Greek Parliament in Athens on November 7, 2012 during a 48-hour general strike.

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Strike brings Greece to a standstill – Wheelchair users protest against a new government austerity bill in Thessaloniki on 7 November, 2012.

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Strike brings Greece to a standstill – Thousands of Greeks protested against further austerity measures in Athens on Tuesday, November 6, ahead of a crucial Parliamentary vote on emergency cuts and tax increases.

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Strike brings Greece to a standstill – Police estimate that about 35,000 people turned out for a peaceful protest in Athens.

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Strike brings Greece to a standstill – Demonstrators shout slogans against new austerity measures required for the bailout package.

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Strike brings Greece to a standstill – Riot police stand guard as demonstrators march in front of the Greek parliament in central Athens during the protests on November 6, 2012.

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Story highlights

The Greek government has overcome two hurdles to qualify for the troika's austerity program

But in the spirit of a Greek tragedy, much political blood has been spilt along the way

The budget for 2013 makes for painful reading, including a contraction of 4.5% next year

But one thing is abundantly clear for Greece: The cash lifeline needs to be delivered

Over the course of five days, the Greek government -- led by the understated conservative Prime Minister Antonis Samaras -- overcame two high hurdles in a dash to qualify for the austerity program set out by the so-called troika, made up of the European Central Bank, the International Monetary Fund and the European Commission.

The first hurdle was the parliamentary vote last week, when the austerity measures were passed by just 153 votes out of 300. The second important vote took place in the wee hours of Sunday night in Athens, this time with a comfortable margin of victory as 167 of 300 lawmakers voted for, in essence, more austerity.

But in the spirit of a Greek tragedy, much political blood has been spilt along the way. Those who voted against the measures were tossed out of the coalition parties, while members of the Democratic Left abstained due to the labor reforms that were built into the overall plan.

This has been a very messy process, with the troika leaning on the relatively new government to deliver what Greece had promised before the current administration came to power following the elections last June. In large part, the restructuring is now there and Greece is telling the troika: "Show me the money."

The implicit agreement on the table: Greece delivers another $17 billion in cuts over two years from labor reforms and tops that off with a new 2013 budget. The troika then puts up the final instalment of $40 billion to avoid defaulting on bonds which start coming due November 16.

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But all of a sudden, there seems to be disagreement in the ranks and backlash from some eurozone member countries not happy with the measures. As one Greek CEO messaged me last night after our coverage of the vote: "We kept our side of the bargain; we need to see delivery from the other side too."

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The budget for 2013 makes for painful reading. A projected contraction of 4.5% next year and a record sixth year of recession, with the economy shrinking more than 30% in that time frame. Public debt to GDP is due to increase to 189%, having risen more than 50% since this whole crisis started. Unemployment last week hit a record 25.4% with youth unemployment leaping to 58%.

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Another Greek executive I spoke with last night after the vote said the population has entered a new phase of acceptance. State workers have taken salary and pension cuts ranging from 15% to 40%, taxes on electric bills have soared, the retirement age has been bumped up to 67 years from 65 years.

Finally, the real shrinking of the state sector is taking place. The state payroll will fall by 125,000 between 2012 and 2016 through attrition and real layoffs. Some of the special pay packages for certain ministries, such as the Ministry of Finance, have been eliminated and salaries have been capped. Some 40 senior employees at the Bank of Greece, the central bank, walked off the job for good in protest of the 5,000 euro salary cap.

He was suggesting that Greeks will soon see the flickering light at the end of the tunnel, with the full backing of German Chancellor Angela Merkel after her recent, high profile public show of support in Athens. Political statements may be offered by the members of the eurozone this week, something the Greek technocratic Finance Minister Yiannis Stournaras promised.

One thing is abundantly clear at this stage. For the state workers who have taken salary hits and for the one million private sector workers who have lost their jobs due to economic depression: The cash lifeline needs to be delivered.